Australian Dollar holds gains following cautious remarks from RBA’s Bullock
|- Australian Dollar advances as the RBA raised the interest rate by 25 basis points.
- Australia’s Building Permits fell 14.9% MoM to a four-month low of 15,542 units in December 2025.
- US Dollar could strengthen amid a cautious tone surrounding the Fed outlook.
The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Tuesday following the Reserve Bank of Australia's (RBA) decision to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 3.85% from 3.6%. The decision was widely expected by the market.
The AUD gained over 1% following the cautious remarks from the RBA Governor, Michele Bullock, during the post-meeting press conference. Bullock said inflation pressures remain too strong, warning it will take longer to return to target and is no longer acceptable. She stressed the board will stay data-dependent and avoid forward guidance.
The AUD/USD pair holds ground despite the seasonally adjusted Building Permits in Australia falling sharply by 14.9% month-over-month to a four-month low of 15,542 units in December 2025, unwinding a downwardly revised 13.1% increase recorded in the previous month.
Australia’s Consumer Price Index (CPI) rose 3.8% YoY in December, accelerating from 3.4% previously. With headline inflation remaining above the RBA’s 2–3% target, recent PMI and employment data reinforce the case for a tighter monetary policy stance.
US Dollar declines after recent modest gains
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is edging lower after four days of gains and trading near 97.50 at the time of writing.
- The Greenback received support as the yield on the 10-year US Treasury bond hovered near 4.27% on Tuesday after a nearly 1% rise in the prior session, underpinned by strong US economic data and shifting Federal Reserve (Fed) policy expectations toward hawkish.
- Data on Monday showed an unexpected rebound in US factory activity, underscoring economic resilience, as the Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) rose to 52.6 from 47.9 in December, beating market expectations of 48.5.
- US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve (Fed) Chair. Markets interpreted Warsh’s appointment as signaling a more disciplined and cautious approach to monetary easing.
- The US Dollar gained traction as risk sentiment improved after the US Senate reached an agreement to advance a government funding package, thereby averting a shutdown, according to Politico.
- US producer-side inflation firmed, moving further away from the Federal Reserve’s 2% target and reinforcing the central bank’s policy stance. US PPI inflation holds steady at 3.0% year-over-year (YoY) in December, unchanged from November and above expectations for a moderation to 2.7%. Core PPI, excluding food and energy, accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline to 2.9% and highlighting persistent upstream price pressures.
- St. Louis Fed President Alberto Musalem said additional rate cuts are not warranted at this stage, characterizing the current 3.50%–3.75% policy rate range as broadly neutral. Similarly, Atlanta Fed President Raphael Bostic urged patience, arguing that monetary policy should remain modestly restrictive.
- Australia’s RBA Trimmed Mean inflation increased to 0.2% month-over-month (MoM) and 3.3% year-over-year (YoY). The monthly CPI rose 1.0% in December, up from 0% previously and above the 0.7% forecast.
- Australia’s export prices rose 3.2% quarter-on-quarter (QoQ) in Q4 2025, rebounding from a 0.9% fall in Q3 and marking the first increase in three quarters, as well as the strongest gain in a year. Meanwhile, import prices climbed 0.9%, beating expectations for a 0.2% decline and reversing a 0.4% drop in Q3.
- China's RatingDog Manufacturing Purchasing Managers' Index (PMI) rose to 50.3 in January from 50.1 in December. This figure came in line with the expectations. The latest reading indicated a slight expansion in factory activity, but the fastest growth since last October.
- Australia’s TD-MI Inflation Gauge rose 3.6% year-over-year (YoY) in January, up from 3.5% previously. The Monthly Inflation Gauge increased by 0.2%, slowing sharply from December’s two-year high of 1% and marking the weakest pace since August.
- ANZ Job Advertisements jumped 4.4% month-over-month (MoM) in December 2025, rebounding from a revised 0.8% decline and posting the first increase since July. The rise was also the strongest monthly gain since February 2022, signaling renewed momentum in hiring toward year-end.
Australian Dollar rebounds from nine-day EMA
The AUD/USD pair is trading around 0.6970 on Tuesday. Daily chart analysis indicates that the pair remains above the nine-day Exponential Moving Average (EMA), indicating a persistent bullish bias. The 14-day Relative Strength Index (RSI) is at 70; it typically signals bullish momentum, but stretching momentum.
The AUD/USD pair could rebound toward 0.7094, the highest level since February 2023, which was recorded on January 29. On the downside, the primary support lies at the nine-day Exponential Moving Average (EMA) of 0.6937, followed by the 50-day EMA of 0.6746.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.17% | -0.12% | -0.06% | -0.80% | -0.53% | -0.20% | |
| EUR | 0.17% | 0.00% | 0.06% | 0.12% | -0.63% | -0.32% | -0.02% | |
| GBP | 0.17% | -0.01% | 0.06% | 0.11% | -0.64% | -0.36% | -0.03% | |
| JPY | 0.12% | -0.06% | -0.06% | 0.07% | -0.68% | -0.40% | -0.06% | |
| CAD | 0.06% | -0.12% | -0.11% | -0.07% | -0.75% | -0.47% | -0.14% | |
| AUD | 0.80% | 0.63% | 0.64% | 0.68% | 0.75% | 0.29% | 0.62% | |
| NZD | 0.53% | 0.32% | 0.36% | 0.40% | 0.47% | -0.29% | 0.33% | |
| CHF | 0.20% | 0.02% | 0.03% | 0.06% | 0.14% | -0.62% | -0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.